What is a Dispatch Carrier Agreement?
The dispatch carrier agreement is a contract between an independent dispatcher and the trucking company. Unlike a typical lease agreement that states the terms for renting a truck, this document details a much different transaction. In this instance, the dispatcher is an independent contractor who secures loads for the trucking company . A dispatch carrier agreement provides the terms of dispatching, the expected form of compensation and payment for those services and more. Essentially, without a dispatcher, the small-time owner-operator may have a difficult time finding loads at a competitive price. The dispatcher serves as a liaison between the trucking company and any shippers who need delivery assistance.
Important Elements of a Dispatch Carrier Agreement
The essential components of a dispatch carrier agreement are set forth in the sample Dispatch Carrier Agreement that is provided on this site. The sample Dispatch Carrier Agreement contemplates the broker, the shipper and the carrier and sets forth the obligations of each party. Specifically, Section 1 provides that the relationship is a contract carrier relationship, as opposed to an employee/employer relationship, and that nothing in the agreement changes the status of the parties.
The Dispatch Carrier Agreement sets out in Section 2 the obligations of the dispatching broker to produce for the carrier load opportunities and establish the fee that the broker shall charge for such services. Typically, this is a percentage of the total revenue collected from the loads obtained by the carrier broker. If the carrier ships freight in its own name, rather than as the agent or contractor of the broker, then the broker commission will be invoices to the carrier as percentages of the freight revenue.
Section 3 addresses the payment of the fee from the carrier to the broker and provides that the broker will assist the carrier in collection efforts in the event that a customer does not pay for loads shipped by the carrier. The carrier should seek to have its brokers provide assistance in collections in order to allow the carrier to focus on engineering and carrying out its operation of transporting freight. If the carrier will pay the freight charges prior to collection from the customer, that must be clearly set forth in the Dispatch Carrier Agreement.
Section 4 establishes the basis of compensation for the carrier for loads tendered by the broker. Such compensation is typically expressed as a minimum per mile fee plus a fee for each stop on a load, plus a per mile charge to the destination. Historically, the carrier had been bound to the terms of payment set forth on the face of the bill of lading generated by the broker. The new industry standard is for the carrier to use its own contract or broker agreement to establish the principal terms of the transaction, not the back of a bill of lading or freight bill.
Section 5 deals with the routing of loads to be delivered by the carrier. Routing is of great importance to the carrier and its driver and must be carefully determined before dispatch. An attempt must be made to have the customer accept the routing if a rate has been negotiated based on a specific route. The attempt must be made to either secure an acceptance of the rate by the customer prior to the carrier dispatching the load or a reservation of the right to re-negotiation if the customer agrees to pay the carrier for an out of route delivery. In the end, it’s the carrier’s truck and the carrier’s driver and they should be in control and aware of where they are going and how long the trip will take. Otherwise, demurrage charges and layover trailer fees will be an increased cost to the Carrier. If the broker insists on routing the load, the broker’s compensation must take into account the additional liability and potential costs of their route determination.
There are a number of issues related to brokers and compensation and level of service provided to the carrier. These are dealt with in other sections of this site.
Advantages of Setting an Agreement as PDF
Dispatch carrier agreements are commonly shared amongst carriers and freight brokers, but many service providers insist on using their own model of the contract. This results in some difficulty in identifying any potential red flags for discrepancies. Instead of maintaining your dispatch carrier agreement in an editable format such as .doc or .docx, consider relying on a PDF copy.
Portability
The most discernible reason for deciding to go with a PDF version of a dispatch carrier agreement is portability. All PDF documents are supported by all widely used computer systems and can be easily viewed on most devices. Device software can read the same PDF regardless of differences in device software.
Security
Modifying a PDF document is tremendously difficult as it is become more advanced than the standard word processor. This is appealing to businesses that are weary of unwanted modification. There are various ways to deterministically identify whether a PDF document has been modified, and there are forensic tools designed to validate whether it has been altered. Therefore, a pdf copy of your dispatch carrier agreement reduces the risk of potential dispute after the fact.
Easy Sharing
The most highly regarded advantage of a PDF is a rich reading experience. Other than being portable and easy to view, PDFs offer features such as bookmarks and attachments. Rather than mailing out a hard copy of your dispatch carrier agreement, or sending out emails, consider sending a file containing bookmarks or attachments. The recipient will receive an easier to read document, without the risk of tampering.
Standardization
Depending on the application, you may wish to allow for a standardized print of your dispatch carrier agreement. Certain applications allow you to replicate a print style for all copies of your dispatch carrier agreement.
How to Make a Dispatch Carrier Agreement as PDF?
To draft a legally valid dispatch carrier agreement, one can use a word document, but a more effective tool is to utilise a software to generate a PDF. You may come across any number of online tools to Draft the templates, but we recommend using a reliable tool in your office as it stores all details easily for future reference.
How does it work? When you order a professional contract on Wise, you will be able to select the clauses that are relevant for you. When you are done, you will be able to get a download link for a PDF.
Why should you use it? The reason why we recommend our (automatic) dispatch carrier agreement is that it provides a variety of clauses from which you may select the most appropriate ones to reflect the individual character of your business and relationships.
Some of the clauses include –
Partnerships "The Carrier is an independent contractor and nothing in this Agreement shall create an agency or contractual of employment relationship between the Carrier and the Freight Broker/Dispatcher."
Confidentiality "The parties agree that during and after the termination of this Agreement, they will not share or disclose, without the express written consent of the other, any details regarding the business or operations of the other party. The Freight Broker/Dispatcher will ensure that any Carrier personnel with access to the cargo and/or load information will comply with the terms of this provision."
Governing Law "The laws of the state of [International Shipping Countries]."
Take for example the clause for ‘Confidentiality’. In its automatic form, it is quite specific, but when lifted out and reused, it is generic enough to apply to a variety of businesses. You can amend it according to your needs, if necessary.
Before you start drafting a dispatch carrier agreement, here are several points to consider.
A dispatch carrier agreement is a formal business contract between you and the carrier. You each have obligations to fulfill. Ensure that you write a clear and complete agreement that covers all aspects of the business relationship.
All terms in the agreement should be fully defined; any ambiguity may arise later. Even though you may have oral agreements along the way, the written agreement is the final say of the transaction.
You may not agree with some of the delivery terms in standard dispatch carrier agreements. These should be crossed off and initialed by both of you if there is something disagreeable.
It may be best to seek the counsel of a legal professional to ensure that you are protected in case of future disputes or losses.
These are just general ideas, as the specifics of your meeting should not be included in the contract.
Legal Requirements for Dispatch Carrier Agreement
When entering into a dispatch carrier agreement, an owner-operator needs to comply with industry regulations and employment laws. Failure to comply can lead to substantial civil and criminal penalties as well as third parties being able to sue a freight broker for damages caused by a transportation industry professional being considered an employee rather than an independent contractor.
The Internal Revenue Service (IRS) has regulations designed to determine whether an individual is an employer’s employee or an independent contractor (nonemployee). In Cromer v. Parnell, 262 F.3d 540 (2001), the United States Court of Appeals for the Fourth Circuit stated that "the most we can say is that the IRS has overriding regulations on the issue that depend on the particular facts of the relationship between the employer and the worker." The IRS uses a multi-factor test to determine if a worker is an independent contractor or an employee . Factors the test considers include: (1) the extent of employer’s control as to the manner in which the work is to be done; (2) whether a distinct business is being performed by the worker; (3) whether or not the work done is part of the regular business of the employer; (4) whether the work done is usually done under the direction of the employer or by a specialist without supervision; (5) the skill required in the particular occupation; (6) whether the employer or the workman supplies the instrumentalities or tools of work; (7) the length of time for which the services are to be performed; (8) whether the work is piecework or hourly paid; (9) whether or not the work is part of the regular business of the employer; (10) whether the parties believe they are creating a relationship of employer-employee; (11) whether the principal is or is not in business; and (12) the tax treatment of the individual. "The agreement between the parties at issue may be considered as one of many factors to be considered."
In addition to the risk of being held liable if the owner-operator is deemed to actually be an employee, 49 C.F.R. § 371.3 provides that a freight broker may not arrange for transportation services with any carrier until the broker has obtained a properly executed copy of Form BMC-85 that is properly executed, or a properly executed copy of a lease between the freight broker and the authorized carrier that is made a part of a properly executed accompanying Form BMC-91.
Typical Problems and Solutions
Despite the benefits, many companies can still face challenges when using dispatch carrier agreements. Here are a few common challenges and their corresponding solutions. Finding the right partner: One of the most significant challenges is finding the right trucking company to partner with. There are several factors to consider, such as the type of goods being transported, the frequency of shipments, and the desired level of service. Solution – Conduct thorough research before signing a dispatch carrier agreement. Research the reputation of potential carriers, their experience in your industry, and their financial stability. It’s also worth reaching out to other companies that use similar shipping services to get recommendations. Documenting specific needs: Another challenge companies face is effectively communicating their specific needs and requirements to the dispatching company. Solution – Clearly outline your company’s shipping criteria in the dispatch carrier agreement. This includes details such as the specific types of goods to be shipped, the size and weight of these goods, the delivery time frame, and any special handling requirements. Maintaining accountability: Companies often struggle with keeping their carrier accountable for meeting the terms of the contract. Solution – Create a system of checks and balances to monitor the performance and reliability of the dispatch carrier company. This may include setting specific metrics for delivery times and weight restrictions, as well as scheduling regular reviews of the performance. Costs associated with utilizing a dispatcher: Many businesses are concerned about how much it costs to use a dispatcher. Solution – There are a variety of factors that affect the costs when using a dispatcher, such as the distance for shipping services and tolls. Setting a budget at the beginning of the dispatch carrier agreement can help prevent any unwanted expenses later.
Sample PDF Template for Dispatch Carrier Agreement
It is always a good idea to have a written document preventing any disputes that could arise in the future. As such, it is recommended to use a sample PDF template as a starting point in order to create your own dispatch carrier agreement if you are not sure of the structure of the document. The sample PDF template would have relevant headings on the sections that need to be included. If you wish to edit the sections and add more information , you can easily do so. You can also choose to remove sections if they are not required for your particular purpose.
The sample PDF template is made available to you for free. You no longer have to pay thousands of dollars for a specific lawyer to draft an agreement that you can draft yourself. Sites such as Pro-Docs.com provide high quality samples of various documents including a sample dispatch carrier agreement PDF template along with other similar templates.